(HedgeCo.Net) The Securities and Exchange Commission has charged a Pennsylvania investment adviser with operating an investment advisory fraud involving over $100 million in investments. The SEC also obtained an emergency asset freeze.

The SEC’s complaint alleges that Brenda Smith, and her fund Broad Reach Capital, LP, raised approximately $105 million from approximately 40 investors by representing that she would invest their money in publicly traded securities through various trading strategies that she championed as providing consistent high returns. However, Smith made very few investments in these trading strategies, and instead largely used investors’ money to repay other investors and for her own personal investments. The complaint alleges that Smith, and the entities she controls, also disseminated false statements touting positive returns and most recently fabricated documents in an attempt to inflate Broad Reach’s assets and lull her investors into believing their capital is safe.

“An investment adviser serves in a position of trust, and has a fiduciary duty to speak truthfully to clients,” said G. Jeffrey Boujoukos, Regional Director of the SEC’s Philadelphia Regional Office. “We allege that Ms. Smith breached her clients’ trust by misleading investors with false claims of how she invested their money and how those investments performed.”

The complaint, filed in federal court in Newark, New Jersey, charges Smith, the fund, Broad Reach Capital, LP, its general partner, Broad Reach Partners, LLC, and the adviser, Bristol Advisors, LLC with violating the anti-fraud provisions of the federal securities laws. The court granted the SEC’s request for an asset freeze and temporary restraining order. The SEC seeks disgorgement of ill-gotten gains and prejudgment interest, and civil penalties against the defendants.